Accidental Death Insurance Policy – ERISA

Life insurance lawyers will have situations where a person has died and the issue is whether or not the death was an “accidental death” and did any exclusion apply to the accidental death.

Here is a 2021, opinion that deals with an accidental death policy with an exclusion and on top of that, the policy is governed by the Employee Retirement Income Security Act (ERISA).  The opinion is from the United States Court of Appeals, 5th Circuit.  It is styled, Luis Lebron v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania; AIG Claim, Incorporated.

Luis had an accidental death policy he purchased through his employer that insured himself and his wife, Barbara.  The policy was issued by National Union and contained an exclusion for death caused “in whole or in part” by “illness, sickness, disease, bodily or mental infirmity, medical or surgical treatment (unless treating a covered injury), or bacterial or viral infection, regardless of how contracted (except when bacterial infection results from an accidental cut or wound or accidental food poisoning).”  Under this ERISA plan National Union had authority to determine benefit eligibility as the plan administrator.

Barbara was later diagnosed with end-stage renal disease which required her to undergo regular dialysis treatment.

Barbara died unexpectedly when she accidentally cut her dialysis catheter with scissors while changing a bandage around the catheter, causing her to bleed to death.  Investigators ruled her death an accident.

Luis claimed benefits from National Union and that claim was denied due to the exclusion in the policy.  The denial was upheld by the National Union administrative review board.

A lawsuit was filed and this case was heard by the trial court on cross motions for summary judgment.  The finding of the administrative review board was upheld by the tria court and this appeal followed.

The parties do not dispute that Barbara’s death resulted from an accident and therefore would be covered but for the “medical or surgical treatment” exclusion.  Accordingly, the issue is whether Barbara’s actions in changing a bandage around her dialysis catheter constitute “medical or surgical treatment,” which the Policy excludes from coverage.  The Policy does not define “medical or surgical treatment.”

Federal common law governs rights and obligations stemming from ERISA-regulated plans, including the interpretation of the Policy provision at issue here.  When construing ERISA plan provisions, courts are to give the language of an insurance contract its ordinary and generally accepted meaning if such a meaning exists.  The Court is to interpret the contract language in an ordinary and popular sense as would a person of average intelligence and experience, such that the language is given its generally accepted meaning if there is one.  Only if the plan terms remain ambiguous after applying ordinary principles of contract interpretation are the courts compelled to apply the rule of contra proferentum and construe the terms strictly in favor of the insured.  An insurance contract is ambiguous if it is susceptible to two or more reasonable interpretations that can fairly be made, thus supporting contradictory results.

The term “medical treatment” is unambiguous and has a generally accepted meaning, which we are bound to apply.  Webster’s Third New International Dictionary defines “medical treatment” as “the action or manner of treating a patient medically or surgically,” and to “treat” is “to care for (as a patient or part of the body) medically.”  The word “treatment” thus is a “broad term covering all the steps taken to affect a cure of an injury or disease; including examination and diagnosis as well as application of remedies,” according to BLACKS LAW DICTIONARY.  Barbara’s actions in changing the bandages around her dialysis catheter fall under this broad term because, by changing her bandages in preparation for a dialysis appointment scheduled later that day, she was facilitating treatment for her disease.

Moreover, courts uniformly apply the “medical treatment” exclusion where an accidental “mishap in the course of treatment” causes death because “the normal understanding” is that “injuries caused not by the illness itself but by the treatment of the illness” are excluded under policies similar to the one at issue in this case.  Cases in which a patient overdoses on prescribed medication or in which the insured is injured by a doctor’s malpractice are analogous, and in those cases courts also uniformly conclude that the mishaps are caused by medical treatment and, therefore, are excluded from coverage.  It appears that every court that has considered similar exclusionary clauses has held such provisions to exclude from coverage death caused by various mishaps occurring during the course of medical treatment.

Because the term “medical or surgical treatment” unambiguously covers Barbara’s actions in changing her bandages in preparation for an upcoming dialysis treatment, there is no genuine issue of material fact that the Policy does not cover Barbara’s death.

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